What is a Home Equity
Conversion Mortgage?

Also known as HECM, a Home Equity Conversion Mortgage is the reverse mortgage program of the Federal Housing Administration (FHA).

How does HECM Work?

A Home Equity Conversion Mortgage allows seniors to convert the equity of their home into cash, where the total amount borrowed is based on the appraised value of the home and the age of the youngest borrower minus any outstanding loans. Since the load is insured by the FHA, the borrower will never owe more than the value of the loan.

General FHA Requirements

When considering qualifying for the FHA reverse mortgage program, you must meet the following requirements:

Have completed HUD-approved counseling
Be at least 62 years of age or older
Have equity in the your home to access
Able to meet a few on-going requirements

FHA Property Requirements

To get accepted into the FHA reverse mortgage program, the below eligible property types must meet all FHA property standards and flood requirements:

Single family home or a 2-4 unit home with one unit occupied by the borrower
U.S. Department of Housing and Urban Development (HUD) approved condominium
Manufactured home that meets FHA Requirements

HECM Costs

HECM borrowers can finance their HECM costs by paying for it through the proceeds of the loan. Financing allows the borrower to avoid paying almost anything out-of-pocket. A Home Equity Conversion Mortgage will have fees and charges associated with it, such as origination and servicing fee, a mortgage insurance premium (MIP), and third-party charges.